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Compliance
The Essential Compliance Checklist for Nonprofits
As a Non-Profit organization, the key benefits of staying compliant directly relates with your reputation, the validity of your mission and status. These benefits are critical for many organizations. The information below is a checklist that focuses on the most general compliance related tasks you must complete or manage.
Not Allowed
- Have any shareholders. Differences between a Nonprofit Corporation and a For Profit Corporation exist in the realm of no shareholders because no one is allowed to derive a benefit. Even with large and successful organizations, there is no option to invest and hold shares.
- Spend money on items not related to your mission. As a Nonprofit, the revenue you earn in the form of donations, drives, or any other source must be used to advance your mission.You are not allowed to spend income on items that do not assist your core purpose (ie. raising funds to purchase things which doesn’t benefit the target of your mission)
- Avoid Political activity.In both the US and Canada, there are certain restrictions on how Nonprofits can assist in political activity. They must try to keep a non partisan relationship with politics
- Use Income or substantial time on “unrelated activities”. This point refers back to the 2nd point in regard to committing resources to an activity that does not advance the mission of the Nonprofit. As such, Organizations must try their best to effectively commit resources that generate monetary or immediate profit for those that the Nonprofit serves.
Critical Practices
- Organized Records.Keeping organized documents that outline all activities are essential for several reasons. Nonprofits should keep proper donation receipts to serve donors better and be able to file returns with respective agencies. Creating a paper trail is also essential to in order to promote transparency and prevent wrongdoing by any one member.
- Act in accordance with company rules.Enforce company policies and rules to prevent and ensure a committed team free of any wrongdoing.
- Gather Employees for Board Meetings. It’s essential for Nonprofits to conduct consistent board meetings and aim to meet at least annually to make decisions on ongoing and new initiatives as well as monitor compliance.
Allowed Practices
- Pay members, officers, and directors.Treat salaries as Nonprofit expenses for those who earn them.
- Pay Contractors.Treat independent contractor pay as Nonprofit expenses just like above at the rate of reasonable pay for services rendered.
- Build Campaigns.It’s encouraged for a Nonprofit to build a strong grassroots campaign.
- Ethical Advertising.Nonprofits should aim to advertise given that the provided information is truthful and practices are ethical.